Zee Entertainment gains 7% as board to consider fund raising on July 16

On June 3, ZEEL's the board had considered and given its in-principle approval for raising funds by up to Rs 2,000 crore.

Zee Entertainment in focus: Shares of Zee Entertainment Enterprises (ZEEL) were up 7 per cent to Rs 157.20 per share, amid heavy volumes, on the National Stock Exchange (NSE) in Friday’s intra-day trade. 

The uptick in share price came after the company said its board will meet on July 16, to consider fund raising plan.

In exchange filing, ZEEL said, a meeting of the board of directors of the Company is scheduled to be held on Tuesday, July 16, 2024, inter alia, to consider and approve the raising of the funds through the issuance of appropriate instruments along with the terms and conditions of the appropriate instruments, subject to such regulatory/statutory approvals, as may be required.

Last month, the board had considered and given its in-principle approval for raising funds by up to Rs 2,000 crore through the issue of securities through all permissible modes in one or more tranches, including but not limited to private placement, a qualified institutions placement (QIP), preferential issue or other methods.

At 11:15 AM, ZEEL, the top gainer among Nifty Midcap 100 index, was up 6.2 per cent at Rs 156.30. In comparison, the Nifty 50 and Nifty Midcap 100 index were up 0.89 per cent and 0.38 per cent, respectively. A combined 26.16 million shares changed hands on the NSE and BSE.

However, thus far in the calendar year 2024 (CY24), ZEEL has underperformed the market, falling 45 per cent, as compared to nearly 13 per cent rally in Nifty 50. The stock had hit a 52-week low of Rs 125.50 on June 4, 2024.

ZEEL in Q4FY24 earnings update said that the major work is already underway to implement identified margin improvement interventions across the business. Based on these efforts, our visibility and confidence on performance enhancement plan has further improved, the company said.

Q1FY25 (April to June quarter) will see most of one-time higher costs towards implementing the interventions, offsetting underlying operating performance improvements and causing softness on margins.

ZEEL said the gradual margin improvement to kick in from Q2FY25, while, FY25 margins to be meaningfully better than FY24. For FY26, the company aspires to deliver industry-leading 18-20 per cent earnings before interest, taxes, depreciation, and amortization (Ebitda) margin.

According to Emkay Global Financial Services, in Q1FY25, ZEEL’s performance should be impacted by shifting of advertisement spends. The brokerage firm is building in a marginal growth of 2 per cent Y-o-Y for Q1 ad revenues.

Meanwhile, subscription revenues should continue to see steady growth, aided by implementation of price hikes. Other sales and services should improve on the back of two movie releases, and syndication deals. 

Further, Zee’s profitability is likely to be hit by one-time interventions. The company continues with its interventions, to reach its medium-term target of 18-20 per cent Ebitda margin by FY26 and 8-10 per cent revenue growth, the brokerage firm said in Q1FY25 result preview.